Jo White FCA CTA
- Private Client Tax Partner
- +44 (0)330 124 1399
- Email Jo[email protected]
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Most people think that any profit they realise selling their main home is exempt from Capital Gains Tax, and in the majority of cases this is right due to main residence relief. However, care needs to be taken, particularly where you own a house with significant land, or own multiple homes.
Main residence relief only exempts gains on the garden or grounds that either do not exceed 0.5 hectares (1.24 acres), or a larger area which is required for the reasonable enjoyment of your home taking into consideration its size and character. Land which is more than required for the reasonable enjoyment of the property, including other buildings on that land, will be liable to Capital Gains Tax if they are sold at a profit. With careful planning the effect of this can be minimised.
It should also be remembered that you can only have one main residence for tax purposes, and married couples can only have one main residence between them. If you own more than one house that you use as a residence you should consider whether an election has or can be made which could save significant tax in the future. If no election is made, which property is your main residence for tax purposes will be based on the facts of the case.
If you are buying a property you should not forget the Stamp Duty Land Tax (‘SDLT’) which will be payable in addition to the purchase price. With the introduction of the new surcharge rates for SDLT this is becoming increasingly more costly where reliefs cannot be claimed.
It is important not assume that as you are selling your home you will not have to pay any tax. By planning in advance you could significantly reduce your tax liabilities.
For further information please speak with your usual Kreston Reeves adviser here, or contact Jo White here or on +44 (0)330 124 1399 who would be pleased to have a no-obligation initial meeting with you.
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